The Supreme Court just handed Obama a significant loss on one of his biggest environmental initiatives

Wind turbines in Germany, with a coal power plant in the distance. Ina Fassbender/Reuters A divided Supreme Court on Monday dealt a significant blow to the Obama administration's environmental agenda, invalidating a rule that would limit the release of mercury and other pollutants from power plants.

In a 5-4 ruling, the Court found that the Environmental Protection Agency did not appropriately consider the costs to utility companies when handing down the rule under the Clean Air Act.

"We hold that EPA interpreted unreasonably when it deemed cost irrelevant to the decision to regulate power plants," Justice Antonin Scalia wrote in the court's majority opinion.

Scalia was joined in his majority opinion by the four other conservative justices, including the swing vote Justice Anthony Kennedy. The high court's four liberals dissented.

The challenge centered on new EPA regulations that would prohibit some plants from emitting toxic chemicals, including mercury. But industry groups and more than 20 states sued the federal government, arguing that the EPA did not adequately consider the costs to power plants before instituting the regulations.

The Obama administration argued that the costs were only a fraction of the industry's profits. The EPA initially said it was not required to take costs into account but that it eventually did so and determined that the benefits far outweighed the costs.

The plaintiffs in the case said the new regulation could add almost $10 billion in annual costs. But the EPA countered that the economic benefits could reach as much as $90 billion per year, based on health benefits and saved lives. The plaintiffs countered that the maximum benefit could reach no higher than about $6 billion.

The Mercury and Air Toxics (MATS) regulation had taken effect in April.

Scalia suggested in his opinion that the government did not consider whether their regulations would impose any harm on human health.

"The government concedes that if the agency were to find that emissions from power plants do damage to human health, but that the technologies needed to eliminate these emissions do even more damage to human health, it would still deem regulation appropriate," he wrote. "No regulation is 'appropriate' if it does significantly more harm than good."

In a fiery dissent, Justice Elena Kagan said the EPA acted "well within its authority" in imposing regulations that could save "many, many lives."

REUTERS/Larry Downing

"The result is a decision that deprives the American public of the pollution control measures that the responsible agency, acting well within its delegated authority, found would save many, many lives," she wrote.

The case, Michigan v. EPA, is part of a series of legal challenges to the Obama administration's unilateral efforts to curb pollution from coal-burning power plants. With these regulations, the government attempted for the first time to employ the Clean Air Act to limit mercury and carbon pollution from the nation's power plants.

"Most recently, what I've done is I've said — about 40% of the carbon that we emit comes from power plants," President Barack Obama said at a town-hall style event last June. "So what we've said is, through the Environmental Protection Agency, we're going to set standards. We set standards for the amount of mercury and arsenic and sulfur that's pumped out by factories and power plants into our air and our water. Right now we don't have a cap on the amount of carbon pollution. So we said we're going to cap it."

"Obama administration officials like to pretend that the costs of their massive and regressive regulations either don't exist or don't matter," McConnell said. "Middle-class families in Kentucky and across our country don't have that luxury, and are often the first to suffer."